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Local governments plan for cuts

ST. PAUL -- Minnesota mayors said state budget reductions could result in fewer city services, but some rural elected officials say public safety cuts would be off the table.

Any reduction in state aid to his city will result in hiring delays and trimmed services, Alexandria Mayor Dan Ness said.

Ness said Alexandria's plan to hire two new police officers already is on hold because of budget uncertainties, but he is not looking to reduce the police force.

"We have not cut any cops, nor would I anticipate doing that," Ness said, adding that his city is growing in population and size. "We don't dare find ourselves too short."

Most cities have not started drafting their budgets for 2010, but Hutchinson Mayor Steve Cook doubted his community would cut its police force if it lost state aid.

"It's hard to imagine, but you don't know until you work through it," Cook said.

Local government officials and health-care providers are among the most vocal recipients of state aid urging Gov. Tim Pawlenty and the Democrat-controlled Legislature to reach a budget agreement before the Legislature's required midnight Monday deadline.

The governor says he will cut budgets on his own if there is no overall budget deal by the time lawmakers adjourn for the year at midnight Monday.

City leaders say they expect any state aid cuts to be worse one year from now, but said that would give them time to react to the reductions. Cities already are nearly five months into their budget for 2009, so it would be tougher to find ways to absorb state aid cuts yet this year.

While 2010 state aid cuts could be deeper, cities and counties can raise property taxes and have more time to adjust their budgets, local government officials said.

"They have more time to change what services they offer," said Tim Flaherty of the Coalition of Greater Minnesota Cities.

Floodwood Mayor Jeff Kletscher said there is little he can turn to if he has to cut his city's budget as a result of less state aid. Floodwood was spared emergency state aid cuts in December, but Kletscher said his city has to assume it could lose state money in the future.

"There's just nowhere to go if you're in a small city," Kletscher said. His city employees four full-time workers; two are police officers.

Pawlenty Saturday proposed cutting $450 million out of about $1.2 billion in local payments over two years, and cities are upset over the prospect of losing money.

Rep. Torrey Westrom, R-Elbow Lake, said cities and counties can trim their budgets by renegotiating labor contracts and imposing wage and hiring freezes.

"I don't dismiss that it's going to be some pain," Westrom said.

In his original budget proposal, Pawlenty recommended cutting $281 million out of $526 million Local Government Aid annual spending. The House proposed chopping $118 million.

Revenue Commissioner Ward Einess said the governor is willing to negotiate how the proposed $450 million cut is divided among local governments.

In a late Friday meeting, House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, pushed for details about how much money would be cut from cities, counties and other local governments if there is no budget agreement. But Einess said he could not provide that information because too many issues remained unresolved.

"It really is contingent on decisions that have yet to be made," Einess said.

Health-care institutions warn that budget cuts could force hospitals and clinics to scale back operations because they would receive lower state reimbursements.

Democratic lawmakers said Saturday that two major Twin Cities hospitals could be forced to partially close or shut down all together because of Pawlenty's health-care veto.

Pawlenty's first line-item veto -- $381 million from a health-care program for the state's poorest citizens -- may save the state far less that, lawmakers said, because those citizens would move onto a state-subsidized program.

Human Services Commissioner Cal Ludeman said that medical providers have described possible health-care cuts as "devastating," but he said state government's share of the state health-care market only is about 15 percent.

"It depends on what devastating is," Ludeman said of the impact of state budget cuts in the health-care area.

Rep. Paul Marquart, chairman of a property tax committee that deals with local aid payments, said cities are particularly worried because in late December Pawlenty cut Local Government Aid to help balance the state government. Some cities could be especially vulnerable to aid cuts, depending on how those cuts are made, the representative said.

Einess said, however, that decisions have not been made about how to cut aid.

The commissioner told Marquart that it is possible that smaller cities could be spared the harshest cuts. In his December action, Pawlenty did not cut aid to cities of up to 1,000 population.

Marquart said any local aid cuts would translate into higher property taxes. Pawlenty often said, however, that local officials decide how much to raise taxes and state cuts could be absorbed by using budget reserves and trimming programs.

Mayors said budget reserves are needed for such things as ensuring employees can be paid.

Scott Wente and Don Davis work for Forum Communications Co., which owns the Bemidji Pioneer.